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Hungarian Banks Win Dismissal of Holocaust Claims

Hungarian victims of the Holocaust failed to persuade a panel of judges that they should be able to sue Budapest-based OTP Bank Plc (OTP) and MKB Bank Zrt, a unit of Munich-based BayernLB Holdings HG, in U.S. courts.

The U.S. court of appeals in Chicago today dismissed the case against the banks, ruling that American courts don’t have jurisdiction because the lenders lack a sufficient connection with the U.S.

“This decision should not, of course, block plaintiffs from pursuing their claims in another forum, but they cannot proceed against these defendants in U.S. federal courts,” U.S. Circuit Judge David Hamilton wrote for the unanimous three-judge panel.

The ruling in favor of OTP Bank and MKB Bank was one of three issued by the appeals court today on claims filed by Hungarian Holocaust victims or their heirs, who collectively are seeking about $75 billion in damages, according to the rulings.

The victim-plaintiffs claim the banks and other defendants aided and abetted the Nazi-driven World War II-era genocide in which six million European Jews perished.

The court rejected a related appeal by Erste Group Bank AG (EBS) on procedural grounds. The Vienna-based bank was challenging a lower court denial of a dismissal request.

National Bank

Finally, the same three judges threw out a ruling by a lower court that denied a bid by Hungary’s national bank, Magyar Nemzeti Bank, and its national railway to have the claims dismissed under the federal Foreign Sovereign Immunities Act.

Still, the appeals court didn’t throw out those claims. It returned the matter to the lower court for consideration of whether the plaintiff-victims had exhausted their remedies in Hungary and whether the railroad had enough commercial contact with the U.S. to justify American court jurisdiction.

Plaintiffs’ attorney Robert Pavich of Chicago said while he hadn’t fully reviewed all three rulings, he was gratified by the court’s decision concerning Erste.

Asked whether he would continue to pursue the OTP and MKB claims, Pavich said, “If there’s going to be a refiling, one of the places you would have to look at seriously would be Hungary.”

Pavich’s clients in that case were seeking group status as well as an award of at least $2 billion in damages plus interest compounded annually from 1944, according to a January 2011 revised complaint.

Neither OTP’s investor relations department nor the media relations department in BayernLB Holdings immediately replied to e-mailed requests for comment on the decision.

The cases are Abelesz v. Erste Group Bank AG, 11-2940; Abelesz v. Magyar Nemzeti Bank, 11-2387, and Abelesz v. OTP Bank, 11-235, U.S. Court of Appeals for the Seventh Circuit (Chicago).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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